Lobbyist charged with making illegal campaign donations
August 5, 2010
By GREG GORDON AND SHASHANK BENGALI
Miami Herald / McClatchy Newspapers
WASHINGTON -- A federal grand jury on Thursday charged a once-powerful Washington lobbyist with evading federal limits on campaign donations by using straw donors to funnel hundreds of thousands of dollars to members of Congress, especially those with influence over military spending.
The 11-count indictment, handed up in Alexandria, Va., charges that Paul Magliocchetti concealed from politicians that that he and his now-defunct firm, PMA Group Inc., were the true source of many of the campaign donations from his family, friends, employees and other straw donors. Corporations are barred from donating to federal election campaigns.
While large illegal foreign donations have been uncovered before, Magliocchetti's alleged scheme may have reached unprecedented proportions for U.S. congressional donors.
Magliocchetti, his family and the firm's political action committee gave over $2 million to members of Congress since 1991, and he's accused of reimbursing donors with hundreds of thousands of dollars in bonuses, kickbacks, corporate checks or personal checks from 2003 to 2008.
Larry Norton, a former general counsel of the Federal Election Commission, said he couldn't recall "a corporate reimbursement case of that scale or even close," adding that it likely will feed public cynicism about the influence of special interests in the nation's capital.
The PMA Group collected $116 million in lobbying fees from 1998 to 2009, according to the Center for Responsive Politics, mainly from defense contractors. Among them were L-3 Communications, which describes itself as the sixth-largest defense company in the United States, specializing in military surveillance and communications equipment, and ITT Corp., which describes itself as a "Top 10" defense contractor.
PMA's donations in recent years were tilted heavily toward senior members of the House of Representatives and Senate appropriations committees that could most benefit his clients by approving spending on military contracts and grants.
Rep. Norm Dicks, a Washington state Democrat and the chairman of an appropriations subcommittee that oversees defense spending, received $101,200 from PMA employees and its political action committee in the election cycles from 2002 to 2008. Of that sum, $30,500 went toward his 2008 re-election - the most donated by employees from any company, according to the Washington, D.C.-based Center for Responsive Politics.
"I expect we would return any (donations) that are found to be illegal," said George Behan, a spokesman for Dicks.
The ranking Democrat on same House subcommittee, Rep. Pete Visclosky of Indiana, received $194,700 from 2002 to 2008, including $61,200 in the 2008 race. Rep. Jim Moran, a Virginia Democrat, received $145,500.
The biggest donor to the ranking Republican on the panel, Rep. Bill Young of Florida, was one of PMA's clients, Finmeccanica SpA. The Italian conglomerate, which operates defense, aerospace and energy companies, gave $42,350 in individual and PAC donations to Young.
The late Pennsylvania Rep. John Murtha, who arranged millions of dollars in contracts for PMA clients while he was the ranking Democrat on the House Appropriations Committee, received $48,550 in PAC and individual donations from Finmeccanica and $28,300 from PMA in the 2008 election cycle.
The donations, in the latest of a string of recent lobbying scandals, once again put members of Congress on the defensive, forcing them to decide whether to keep the tainted contributions, return them or give them to charity.
A spokesman for Sen. Lindsey Graham, who isn't an appropriations committee member but received $3,500 from Mark Magliocchetti and $2,000 from other family members, said the South Carolina Republican would "disgorge" those donations.
Rep. David Price, D-N.C., another Appropriations Committee member who got $250 from Magliocchetti and his family in 1998, said that all the money from anyone associated with PMA would be forwarded to charitable organizations.
While Magliocchetti made an initial court appearance and was released on $2 million bond, his son, Mark, pleaded guilty Thursday to accepting over $120,000 from an unidentified person and company and using those funds to make illegal donations.
Mark Magliocchetti said in court papers that, after joining his father's firm upon graduating from college, he gradually became aware that it was illegal for him and his wife to pass off others' money as their own donations.
The indictment said that Paul Magliocchetti also used two acquaintances who lived near his Florida vacation home to make donations by identifying them as members of PMA's board of directors.
While the indictment repeatedly states that members of Congress unknowingly reported to the FEC that the donations were legal, it said that Magliocchetti telegraphed the source of his campaign largesse by using as straw donors his family members, employees of his firm and identifiable associates and by hosting political fundraisers.
The case exemplifies a major loophole in the campaign finance system - the ease with which donors can accept "kickbacks for giving the money, and then the organization or company privately gets credit for it," said Larry Sabato, a University of Virginia political science professor.
He said, however, that "it strains credulity" to think that the politicians who took money from Magliocchetti's family and associates didn't guess the actual source.
"People in politics are very smart, and they really ought to connect the dots, and it's hard to believe that no one ever connected the dots," he said. "All this money coming from the same family. Did no one ever wonder whether some of this was being kicked back by the company?
"My answer to it is - if it ever crossed their mind - they made sure to dismiss it quickly. Those are questions they don't want to ask."
(James Rosen, Les Blumenthal and Barbara Barrett contributed to this article.)
http://www.miamiherald.com/2010/08/05/1763659_p2/lobbyist-charged-with-making-illegal.html
And according to other sources, Murray also is a big recipient. http://seattletimes.nwsource.com/html/politics/2008906547_pma23.html
Murray, a member of the powerful Senate appropriations committee, ranked 25th on the PMA contribution list, receiving $26,000 in donations.
Because Senate disclosure rules are more lax than in the House, it's difficult to tell exactly how many earmarks Murray championed for PMA clients. Based on news releases, she requested and got at least two earmarks worth $4.8 million for PMA clients last fiscal year.